The French stores of Virgin Megastore have declared themselves insolvent. The chain can no longer pay its bills and debts have risen too high. The insolvency can either result in a reorganisation or in a forced liquidation.
Internet strain on sales volume Virgin
Virgin Megastore has been confronted with a dropping sale of CDs and DVDs for some time now, as more and more people prefer downloading their music. Furthermore, the company suffers from a high rent burden for their stores, which are placed at top locations.
To adjust to this, Virgin Megastore had already reduced its number of employees by 200 in the last two years, leaving only some one thousand employees. The chain of music stores, with 25 locations in France, is owned for 74% by Butler Capital Partners since 2008. Group Lagardère, that bought the stores from British billionaire Richard Branson in 2001, still owns twenty percent.
The ambitious plans at the start of Virgin's French chain , including the biggest music store in the world on the Champs Elysées, have long gone. In 2011 Virgin Megastore had a sales volume of 286 million euro, which was insufficient to keep the chain profitable and to cut back the debt of 22 million euro.
At the end
of 2012 the company could no longer pay rent for its store on the
Champs Elysées, which earned about a fifth of the total sales
volume. Therefore, a special council is planned later on today. Virgin
Megastores France is not alone in its struggle: local rival Fnac is down there as well, while Virgin Megastore's British branch already
pulled the plug in 2007. (YVL)